Thriving with Marketing 3.



Philip Kotler Jeddah, Saudi Arabia, October 10, 2010

Winning in Hard Times
Session One. How to meet today’s and tomorrow’s challenges with Marketing 3.0. Session Two. How to increase your brand power. Session Three. How to manage sales and marketing.


Session 1. Using Marketing 3.0 to Meet the New Challenges

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How much is this a challenge to your company? Distrust of business Globalization • • Economic recession and turbulence • Technological advances and disruptions • Environmentalism and climate change • The 4/7/12 new social media .• On a scale of 1 to 3 (3 = highest).

They pursue aggressively wild growth. Successful companies get arrogant and think they can do many things.• James Collins wrote in How the Mighty Fall : – Is Your Company Going to Fail? Signs to Watch for Stage 1. They ignore early warning signs of failure 4. Their failure becomes very – – Stage 4/7/12 – . Stage 3. Stage 2.

Economic Recession and Turbulence • Distinguish between: – Recession Disruption Turbulence Larger reserves Shared investments Early warning systems Scenario planning – – • Risk reduction strategies – – – 4/7/12 – .

Christensen. • . p. xxix.Disruptive Technologies • OLD • NEW Digital photography Mobile telephones On-line retailing Distance education Digital printing Outpatient clinics Endoscopic surgery Angioplasty • Photographic film Wired telephones Store retailing Classroom education Offset printing General hospitals Open surgery Cardiac bypass surgery • • • • • • • • • • • • • • • Unmanned aircraft • Source: Clayton M. The Innovator’s Manned fighters 4/7/12 • On-line stock brokerage Dilemma.

Air taxis Linux Skype Cell Phones .Tomorrow Will Be Different Yesterday Ford Department stores Digital Equipment Delta IBM At&T Sony DiskMan Source: Clayton Christensen 4/7/12 Today Toyota Wal-Mart Dell Southwest. Ryan Air Microsoft Cingular Apple iPod Tomorrow Cherry Internet retail RIM Blackberry SkyWest.

communicating.Consider How Marketing Has Changed • Old definition of marketing – “Act or practice of advertising and selling a product” (Random House Webster Dictionary of American English 1997) • New definition of marketing “Marketing is the activity. and processes for creating. set of institutions. 4/7/12 – .

• Marketing appeared later to help sales people: – By using marketing research to size and segment the market By using communications to build the brand and develop collateral materials By finding leads through direct marketing and trade shows – – • Marketing was originally located in the sales department.Sales Precedes Marketing • In the beginning there was sales. 4/7/12 • Then marketing grew as a separate department responsible .

sales people and advertising). (the idea of refining the market targets and branding). (the idea of integrating the marketing tools). 4P stage. STP stage. Selling stage. (the idea of building a loyal customer base). 2. 3. 4/7/12 . (the idea of setting up selling systems involving distribution. Customer Relationship stage.Stages in the Development of the Marketing Discipline 1. 4.

Process. and Philosophy • CCDVTP • R -> STP -> MM -> I -> C • CIB 4/7/12 .Marketing Objective.

This will leave less money for marketing research. advertising and consumer promotion for brand building and ultimately reduce brand equity. Social media networks will play an increasingly influential role in shaping brand evaluations . This means that top brands are overvalued and there may be a brand bubble. etc. There is a strong shift to store brands and sub-brands. in its wish to spend less.MARKETING will be less effective in the next few years MARKETING’S RECENT LOSS OF EFFECTIVENESS Marketing budgets will be lower Companies will want marketers to do more with less DISTRIBUTO RS TRADITIONAL MEDIA COMPETITIO N PUBLIC SOCIAL MEDIA NETWORKS § § § § DISTRIBUTORS will § demand more TRADE PROMOTION. Investors will then downgrade the stock. This will leave the company with fewer resources to 4/7/12 prop up demand. will be less inclined to pay higher prices for top brands where the quality differences are minimal. newspapers. are growing LESS EFFECTIVE § Categories are so crowded with competitors that heavy price cutting will be UNAVOIDABLE § The public. This is a VICIOUS Traditional media such as TV 30second spots..

Strategic marketing requires taking a 3-5 year view of the business.STRATEGIC vs TACTICAL MARKETING Most marketing departments are engaged in brand-maintenance instead of brand-building. The rest of the time is spent on forecasting volume. Strategic marketing is missing in many marketing departments. checking manufacturing schedules. and doing routine analysis. Company marketers spend only 15-30% of their time doing true marketing activities. securing approvals on label artwork. SOLUT ION TWO MARKETING DEPARTMENT…!!! Downstrea m Marketing Markets TODAY’s Product Upstream Marketing Create TOMORROW’s Product 4/7/12 .

2005 FOUR POSSIBILITIES Everyone is talking negatively about the company There is no talk about the company The talk is a mix of good and bad comments Virtually all the talk is favorable Marketing 2.0 Consumers play the key role of creating the value through co-creation of product and service . Thus a brand can be hijacked.The Age of Social Media.0 Managers listened to the consumers’ voices to understand their minds and capture market 4/7/12 insights Marketing 3. New York: Portfolio. Brand Hijack: Marketing without Marketing. Marketers have Lessening Influence in Shaping Their Brand Image Person-to-person conversations about many products can exceed the amount of communication under the company’s control. see Alex Wipperfürth.

EVOLUTION OF MANAGEMENT THINKING Product Manage ment Custom er Manage ment Brand Manag ement Value Mana geme nt 1950 s– 1960 s 4/7/12 1970 s– 1980 s 1990 s– 2000 s 201 0s – 202 0s .


suppliers. 3 Ask for consumer feedback and enrich the platform by incorporating all the customization efforts made by the network of consumers. New York: McGraw-Hill. Prahalad and M. 2008 Three key processes of CO-CREATION: 1 A company creates a “platform”. 2 Individual consumers customize the platform to match their own unique identity. 4/7/12 . and channel partners interconnected in a global network of innovation C. consumers.K. The New Age of Innovation: Driving Co-created Value Through Global Networks.COCREATION Evolution of a company’s relationship to its customers: Make a Product with minimal customer testing Refine the Product with extensive customer input and testing Invite Customers to provide ideas and co-create The new ways of creating product and experience through collaboration of companies.S. Krishnan.

0 3. Vision. Heart.MARKETING 1. and Spirit Values Corporate .0 Value-driven Marketing Objective Enabling Forces How companies see the market Key marketing concept Company marketing guidelines Value propositions Interaction with consumers Sell products Industrial Revolution Mass Buyers with Physical Needs Product development Product specification Functional One-to-Many Transaction Make the world a better place Social Media Whole Human with Mind. Emotional.0 Productcentric Marketing Customeroriented Marketing Satisfy and retain the consumers Information Technology Smarter Consumer with Mind and Heart Differentiation Corporate and Product Positioning Functional and Emotional One-to-One Relationship 2.0 MARKETING MARKETING MARKETING 1. and Spiritual Many-to-Many Collaboration 4/7/12 .0 vs MARKETING 3.0 vs MARKETING 2. Values Functional.

Values-Based Matrix Model Heart Mind S pirit INDIV IDUAL COMPANY COMPANY Mission ( hy) W Deliver S IS ACT AT F ION Realize AS AT PIR ION Practice COMPAS ION S V ision ( hat) W ProfitAbility R eturnAbility S ustainAbility V alues ( How ) Be B T E ETR D F R NT E IF E E IAT Make a D F R NCE IF E E 4/7/12 .

S. 4/7/12 . Sustaining Values: SC Johnson Public Report We create economic value We strive for environmental health We advance social progress Values Sustainability We believe our fundamental strength lies in our people. C. JOHNSON VALUEBASED MATRIX MIN D Contributing to the community well –being as well as sustaining and protecting the environment HEAR T SPIRI T Mission Promoting reusable shopping bags Base of the Pyramid To be a world leader in delivering innovative solutions to meet human needs through sustainability principles Vision For SC Johnson. creating sustainable economic value means helping communities prosper while achieving profitable growth for the company.

Progressive Insurance. eBay. Southwest. Patagonia. IKEA. Caterpillar. They also found eight characteristics common to these firms. Google. The researchers found these “firms of endearment” to be highly profitable. Best Buy. Commerce Bank. Wegmans. REI. Timberland. Trader Joe's. Toyota. 4/7/12 . Jordan's Furniture. New Balance. Container Store. JetBlue Johnson & Johnson. L L Bean. UPS. Costco.Companies Americans Love Amazon. Harley-Davidson. CarMax. BMW. Honda. Starbucks. IDEO. Whole Foods.

and their employee turnover is lower They hire people who are passionate about customers They view suppliers as true partners who collaborate in improving productivity and quality and lowering costs They believe that their corporate culture is their greatest asset and primary source of competitive advantage. their employee training is longer.Characteristics of “Firms of Endearment” • They align the interests of all stakeholder groups Their executive salaries are relatively modest They operate an open door policy to reach top management Their employee compensation and benefits are high for the category. Their marketing costs are much lower than their peers while customer satisfaction and retention is much higher. 4/7/12 • • • • • • • .

Marketing the Mission to… 4/7/12 Consum ers Employ ees Channel Partners Sharehol ders .

0 MIND PRODUCTCENTERED ECONOMICVALUE PROFITS MOVING TOWARD MARKETING 3.0 HEART CUSTOMERORIENTED PEOPLE-VALUE SOCIAL PROGRESS Marketing 3.0 SPIRIT VALUES-DRIVEN ENVIRONMENTVALUE SUSTAINABILITY Where is your company now? •Where do you want it to be? •Why? •What would steps would you take? • 4/7/12 .0 Marketing 2.Marketing 1.

The Challenge • Re-moralize the market Re-localize the economy Re-capitalize the poor 4/7/12 • • .

Session 2. Increasing Your Branding Power 4/7/12 .

especially the brand. I would take the brands. and goodwill. trademarks. The former chairman of Quaker Oats said: “If the business were split up. Almost 70% of the market capitalization of such brands as Nike and Prada lie in its intangibles.” 4/7/12 . and you could have all the bricks and mortar—and I would fare better than you.The brand name may account for more than half of the brand value on the balance sheet.

Drumpf Towers? Alphonso D’Abruzzo renamed Alan Alda. 4/7/12 Hog Island in the Bahamas renamed . Chinese gooseberry renamed kiwifruit.What’s In a Name? Everything! Donald Trump’s family name is Dumpf.

Your Brand Needs to Own a Word • • • Mercedes .no hassle car buying FedEx .overnight Wal-Mart .driving Disney .engineering BMW .family fun entertainment Saturn .caring • • • 4/7/12 • .low prices/good values Hallmark .

A great brand triggers 4/7/12 emotions (Harley-Davidson). • . Amazon). • A brand should depict a process (McDonald’s.A Brand Must be More Than a Name • A brand must trigger words or associations (features and benefits).

Brand Asset Valuator Model Figure 2: BrandAsset ®Valuator Model ENERGIZED DIFFERENTIATION The brand’s point of difference Relates to margins and cultural currency How appropriate the brand is to you Relates to consideration and trial RELEVANCE How you regard the brand Relates to perceptions of quality and loyalty ESTEEM An intimate understanding of the brand Relates to awareness and consumer experience KNOWLEDGE BRAND STRENGTH Leading Indicator Future Growth Value Current Indicator Current Operating Value BRAND STATURE 4/7/12 .

LEADING B2B BRANDING COMPANIES DuPont •Siemens •Bosch •General Electric •Saint-Gobain •UPS •FedEx Click to edit Master subtitle style •Tentra Pak •Microsoft •Caterpillar •IBM •Daimler •Michelin •Tata Steel •Morgan Stanley • 4/7/12 .

concrete. How to Brand Sand). bananas. apples. metals. aspirin. bricks.• Find a Way to Brand These Commodities Chicken • Cement Bricks “It is possible to brand sand. beef. …”(Sam Hill. chemicals. wheat. CAN YOU DESIGN NEW FEATURES FOR AN AUTO INSURANCE POLICY? 4/7/12 • . corn grits.

“ I don’t drive a lot of miles. I’m a safe driver.” 4/7/12 . and I’m not usually on the road late at night when accidents are most likely to happen. Insurance their policy customize to fit their budget. shouldn’t I pay less for car insurance?” “ I want an easier way to see how I can meet my insurance needs at a great price. Since I’m less likely to be in an accident.Creating genuine customer MyRate rewards Progressive Name Your Price value: lower risk drivers lets customers with lower rates.

Saturn. Harley’s Owner Groups: – • 4/7/12 HOGs have 250. lesbians. Lexus owners. Apple user groups. The Body Shop. BMW. born again Christians. Porsche. Ladies on . Ikea.000 members divided into 800 chapters: VietNam vets. Barnes and Noble bookstores.Build a Brand Community! • Examples: Harley Davidson.

“King of Beers” • • • WHAT DO YOU THINK OF THESE 4/7/12 SLOGANS . “The Right Choice” Budweiser.Develop a Memorable Brand Slogan • BA. “The World’s Favorite Airline” American Express. “The Natural Choice” AT&T.

No one communication alone tells the whole brand story Each communication provides a different insight into the brand 4/7/12 . lunch. young adults. -Larry Light. weekend. former McDonald’s CMO- ” teens. McDonalds is positioned differently in the minds of kids. weekday. as long as they broadly fit within the basic brand image. It is positioned differently at breakfast. dinner.BRAND JOURNALISM Brand Positioning = Brand Journalism “Marketers should communicate different messages to different market segments at different times. parents and seniors. snack. with kids or on a business trip.

Discerning Coffee Drinker

Coffee and the drinking experience is often unsatisfying

Desire for better coffee and a better consumption experience

Earth Colors

Values /Contemporary Personality / Character Points of Caring Thoughtful Difference Substantiators 24 hour (RTB) training of baristas Points of Parity Brand Mantr a Totally Triple integrated Filtrated Executional Propertieswater / system Visual Identity Siren Green &
Responsible, Locally involved Fairly Priced Stock option/ health benefits or baristas Relaxing, Rewarding moments Fresh, high quality coffee Varied, exotic Reach sensory Rich, Rewarding consumption Convenience, coffee drinks Coffee Experience Friendly experience service

Starbucks gives me the richest possible sensory experience drinking coffee


Local cafes, Fast food 4/7/12 & convenience

The Mercedes-Benz “Enduring Passion”

“The brand Mercedes-Benz is a brand icon, from its founding day till today.” 4040 4/7/12

Measure Your Brand Effectiveness

Customer perceived value Customer satisfaction Customer repeat purchase Customer advocacy

The 3i Model of Branding T GOOD Outdoorhe inspired F ootwear and Apparel Com pany •E ngaged Citizenship • E ironm nv ental Stewardship • Global Hum an R ights 4/7/12 .

4/7/12 .

(Economist Intelligence. 2008) More executives believe that the concept of sustainability is good for corporations in attracting consumers and employees and improving shareholder value. 4/7/12 . There is a link between Companies that put more emphasis on social and environmental impacts reported annual profit growth of 16% and share price growth of 45% while those from companies that did not put a lot of emphasis reported annual profit growth of only 7% and share price growth of only 12%.SUSTAINABILITY AND SHAREHOLDER VALUE corporate sustainability and strong share price performance.

which includes the list of companies with sustainable practices 4/7/12 . environmental. planet. and counter bribery practices Dow Jones Sustainability Index Corporate sustainability as “a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic. and people. environmental and social developments. Company Approach FTSE4Good IndexGood companies work toward environmental sustainability. protect universal human rights. The AIM: To encourage companies to improve their economic. have positive relationship with all stakeholders. possess good supply chain labor standards.TRACKING SUSTAINABILITY Needed: indices that measure how well a company performs in the triple bottom line: profit. and social impact on the society.” Goldman Sachs Introduce the GS Sustain Focus List.

and returnability Sustainabi lity Profitabilit y ? Returnabil ity THREE important metrics that can be quantified financially: Improved cost productivity Higher revenue from new market opportunities 4/7/12 corporate brand value Higher .Selling Sustainability to Investors To convince shareholders. profitability. The issue is to find a linkage of between sustainability. the company needs to provide tangible evidence that the practice of sustainability will improve shareholder value by creating a competitive advantage.

Session 3. Ending the War Between Sales and Marketing • .

Sales and Marketing Complaints • An Oracle salesperson told us. “Marketing sends us business cards they collect at trade shows from people who don’t need us and don’t want to see us. “We . Most of these leads aren’t followed up and go cold.” 4/7/12 • The Head of Marketing had a different perspective.000 leads a year for sales. They call these things “leads”.” • Marketing says “We generate about 25. “are the people who come up with these fancy value propositions that mean nothing to customers but do tell us how out of touch they are with business reality.” a senior airline sales manager told us.” • “Marketing.

4/7/12 Source: Adapted from a McKinsey study . Drive new product development based on customer needs. 4. 3. Strengthen the brands. Improve marketing’s working relation with the other functions.The Six Key Responsibilities of the CMO 1. Measure marketing effectiveness. Gather meaningful customer insights. Utilize new marketing technology. 5. 2. 6.

Undefined Defined Aligned Integrate d 4/7/12 .Define the Existing Level of Relationship The integration of sales and marketing tends to progress through four distinct stages or levels of complexity.

Selling Funnel Customer Awarenes s Brand Awarenes s Brand Considera tion Brand Preferenc e Purchase Intention Purchase Loyalty Customer Advocacy Handoff M a r k e ti n g S a l e s 4/7/12 .

Integrating Customer Management Into the Sales Funnel Purchase Intention Purchase Loyalty Customer Advocacy Prospecti ng Qualifyin g Defining Needs Developi ng Solutions Proposal Preparati on/ Presentat ion Revision & Issue Resolution Contract Negotiati on Implementa tion 4/7/12 .

The Alternative Business Model • Our mousetrap is one of many ways to kill mice • There’s not enough value in the mousetrap to differentiate us from competition • So the role of sales is to add value to our mousetrap • Sales becomes value creation. not value communication ©2009 4/7/12 Neil .

Two Customer Value Types Value = Benefits – Cost • • • Consultative Customers Transactional Customers • • Have a problem Value your time Buy on expertise and trust • 4/7/12 ©2010 Neil Rackham Know what they want Treat you as a commodity Buy on price and convenienc .

Five years ago 10% were transaction al 10% were consultative $ TRANSACTIONA L • Cost focus CONSULTATIVE Convenience Decision • Don’t want to meet • ©2010 Neil Rackham 4/7/12 Most customers would pay a little extra for some Advice focus • Expertise decision • Want meetings • .

Customers Today More buy transactionally More want deeper consultative relationships $ $ $ TRANSACTIONA L • Cost focus CONSULTATIVE Convenience Decision • Don’t want to meet • ©2010 Neil Rackham 4/7/12 The middle is going away. Advice focus • Expertise decision • Want meetings • .

” buying.Today’s Value Propositions are Today. for which we’ll charge you a premium.” 4/7/12 O R ©2010 Neil Rackham . the value propositions customers want are: “We’ll offer you cheap and convenient products. depending on what they “We’ll use our expertise to solve your problems and create custom solutions. but don’t expect extras.

Competencies for Transactional Sales Branding Trade shows Direct Marketi ng Advertisin g Multicustomer Transaction al Sales events Call centers Internet 4/7/12 Campaign s ©2010 Neil Rackham .

Your CMO should be an active participant in the company’s strategic planning group. 4/7/12 • • • .• Where is Marketing Going? market and More companies are adopting a customer orientation 47% of Fortune 1000 firms have a CMO (80% have a CFO). Decide if you want your company to become market-driven or market-driving.

Marketing can contribute by serving more actively in developing the company’s plans for long run profitable growth. and Social Progress. Companies must better define their corporate social responsibilities. 4/7/12 .MESSA GE Companies need to move from a shareholder to a stakeholder view of the enterprise. heart. vision and values. develop and human spirit. Marketers get their clues from how the company defines its mission. The marketers then send offerings that touch the customer’s mind. Companies need to practice the Triple Bottom-Line Model: Economic Value. Environmental Health.

“Within five years. if you run your business in the same way as you do now.” Philip Kotler Click to edit Master subtitle style 4/7/12 . you’re going to be out of business.

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